What Must Happen to Prices Over the Course of a Contract

question 117

Multiple Choice

What must happen to prices over the course of a contract for the seller of a futures contract to maximize the benefits of the hedge?

• A) Prices must decrease.
• B) Prices must increase.
• C) Prices must remain constant.
• D)The seller will profit on the hedge regardless of the direction of price movements.

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Definitions:

Framing of the Announcement

The way in which an announcement is presented or communicated, which can influence the perception and reaction of the audience.

Decision Making

The cognitive process of selecting a course of action from among multiple alternatives.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution, especially when faced with complex situations.

Ideal Choice

A decision-making process aiming to select the best possible option based on specific criteria or values.